PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
COMMISSION FILE NUMBER 132-3
CONSOLIDATED FREIGHTWAYS, INC.
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 94-1444798
3240 Hillview Avenue, Palo Alto, California 94304
Telephone Number (415) 494-2900
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90
days.
Yes xx No
Number of shares of Common Stock, $.625 par value,
outstanding as of June 30, 1994 : 36,242,706
PAGE 2
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-Q
Quarter Ended June 30, 1994
_________________________________________________________________
_________________________________________________________________
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1994 and December 31, 1993 3
Statements of Consolidated Income -
Three Months and Six Months Ended June 30, 1994
and 1993 5
Statements of Consolidated Cash Flows -
Six Months Ended June 30, 1994 and 1993 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
PAGE 3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1994 1993
(In thousands)
ASSETS
CURRENT ASSETS
Cash and temporary cash investments $ 133,042 $ 139,044
Trade accounts receivable, net of
allowances 547,102 508,669
Other accounts and notes receivable 25,161 24,261
Operating supplies, at lower of average
cost or market 35,711 34,940
Prepaid expenses 89,274 69,009
Deferred income taxes 107,911 108,458
Total Current Assets 938,201 884,381
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 155,993 152,402
Buildings and improvements 503,303 488,292
Revenue equipment 983,384 935,482
Other equipment and leasehold improvements 357,563 347,601
2,000,243 1,923,777
Accumulated depreciation and amortization (1,062,453) (1,013,333)
937,790 910,444
OTHER ASSETS
Cost in excess of net assets of businesses
acquired, net of accumulated amortization 348,858 354,076
Operating rights, net of accumulated
amortization 8,719 9,129
Long-term receivables 6,600 6,600
Marketable securities at lower of cost
or market 14,036 13,727
Restricted funds 12,784 13,954
Deferred income taxes 29,168 16,659
Deferred charges and other assets 113,154 102,889
533,319 517,034
TOTAL ASSETS $2,409,310 $2,311,859
The accompanying notes are an integral part of these statements.
PAGE 4
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1994 1993
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 723,394 $ 634,107
Accrued claims costs 141,101 138,242
Current maturities of long-term debt and
capital leases 41,117 39,246
Federal and other income taxes 30,534 33,449
Total Current Liabilities 936,146 845,044
LONG-TERM LIABILITIES
Long-term debt and guarantees 294,901 297,215
Long-term obligations under capital leases 111,105 111,194
Accrued claims costs 165,127 173,999
Other liabilities and deferred credits 257,991 261,032
Total Liabilities 1,765,270 1,688,484
SHAREHOLDERS' EQUITY
Preferred stock, no par value; authorized
5,000,000 shares:
Series A, designated 600,000 shares;
none issued -- --
Series B, 8.5% cumulative, convertible,
$.01 stated value; designated
1,100,000 shares; issued 965,290 and
968,655 shares, respectively 10 10
Series C, 8.738% cumulative, convertible,
$.01 stated value; designated and
issued 690,000 shares 7 7
Additional paid-in capital, preferred stock 264,671 265,182
Deferred TASP compensation (124,938) (129,276)
Total Preferred Shareholders' Equity 139,750 135,923
Common stock, $.625 par value; authorized
100,000,000 shares; issued 43,861,559
and 43,340,801 shares, respectively 27,413 27,090
Additional paid-in capital, common stock 112,332 104,666
Cumulative translation adjustment (1,380) 1,229
Retained earnings 553,777 542,811
Cost of repurchased common stock
(7,618,853 and 7,638,809 shares,
respectively) (187,852) (188,344)
Total Common Shareholders' Equity 504,290 487,452
Total Shareholders' Equity 644,040 623,375
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,409,310 $2,311,859
The accompanying notes are an integral part of these statements.
<TABLE>
PAGE 5
<CAPTION>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
<S> <C> <C> <C> <C>
REVENUES 1994 1993 1994 1993
CF MotorFreight $ 396,113 $ 523,919 $ 928,496 $ 1,044,081
Con-Way Transportation Services 273,913 198,933 504,321 386,900
Emery Worldwide 389,749 297,372 730,179 582,224
1,059,775 1,020,224 2,162,996 2,013,205
COSTS AND EXPENSES
CF MotorFreight
Operating Expenses 364,832 438,515 811,987 871,285
Selling and Administrative Expenses 54,609 58,266 116,176 115,004
Depreciation 18,816 20,745 38,564 41,282
438,257 517,526 966,727 1,027,571
Con-Way Transportation Services
Operating Expenses 196,419 148,383 370,192 286,767
Selling and Administrative Expenses 32,257 24,075 59,913 49,600
Depreciation 8,488 8,006 16,543 16,154
237,164 180,464 446,648 352,521
Emery Worldwide
Operating Expenses 305,718 241,661 580,960 479,830
Selling and Administrative Expenses 54,352 49,874 102,542 95,872
Depreciation 6,312 5,384 12,663 10,746
366,382 296,919 696,165 586,448
1,041,803 994,909 2,109,540 1,966,540
OPERATING INCOME (LOSS)
CF MotorFreight (42,144) 6,393 (38,231) 16,510
Con-Way Transportation Services 36,749 18,469 57,673 34,379
Emery Worldwide 23,367 453 34,014 (4,224)
17,972 25,315 53,456 46,665
OTHER INCOME (EXPENSE)
Investment income 706 1,488 1,221 2,994
Interest expense (6,783) (7,921) (13,659) (15,628)
Miscellaneous, net (1,090) (1,945) (1,455) (1,613)
(7,167) (8,378) (13,893) (14,247)
Income Before Income Taxes 10,805 16,937 39,563 32,418
Income Taxes 5,598 8,545 19,100 15,758
Net Income 5,207 8,392 20,463 16,660
Preferred Stock Dividends 4,763 4,747 9,497 9,496
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 444 $ 3,645 $ 10,966 $ 7,164
Primary average shares outstanding (1) 37,314,476 35,402,458 37,217,462 35,381,427
PRIMARY EARNINGS PER SHARE $ 0.01 $ 0.10 $ 0.29 $ 0.20
FULLY DILUTED EARNINGS PER SHARE $ 0.01 $ 0.09 $ 0.26 $ 0.18
(1) Includes the dilutive effect of stock options.
The accompanying notes are an intergral part of these statements.
</TABLE>
PAGE 6
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
Six Months Ended
June 30,
1994 1993
(In thousands)
CASH AND TEMPORARY CASH INVESTMENTS,
BEGINNING OF PERIOD $ 139,044 $ 152,064
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 20,463 16,660
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 73,223 72,439
Decrease in deferred income taxes (5,047) (12,913)
(Gains) losses from property disposals, net 475 (205)
Changes in assets and liabilities:
Receivables (33,880) (53,507)
Notes receivable from sale of trade
accounts -- 59,367
Accrued claims costs (6,013) (113)
Accounts payable 6,074 (17,507)
Income taxes (5,949) (2,326)
Accrued liabilities, deferred charges
and other 45,664 15,131
Net Cash Provided by Operating Activities 95,010 77,026
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (98,690) (88,908)
Purchases of marketable securities (309) (26,412)
Proceeds from sale of property 2,122 4,720
Net Cash Used by Investing Activities (96,877) (110,600)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt and capital
lease obligations (532) (12,998)
Proceeds from issuance of common stock 7,969 743
Payments of preferred dividends (11,572) (11,597)
Net Cash Used by Financing Activities (4,135) (23,852)
Decrease in Cash and Temporary Cash Investments (6,002) (57,426)
CASH AND TEMPORARY CASH INVESTMENTS,
END OF PERIOD $ 133,042 $ 94,638
The accompanying notes are an integral part of these statements.
PAGE 7
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of
Consolidated Freightways, Inc. and subsidiaries (the Company)
have been prepared by the Company, without audit by independent
public accountants, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of
management, the consolidated financial statements include all
normal recurring adjustments necessary to present fairly the
information required to be set forth therein. Certain
information and note disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from these
statements pursuant to such rules and regulations and,
accordingly, should be read in conjunction with the consolidated
financial statements included in the Company's 1993 Annual Report
to Shareholders.
There have been no significant changes in the accounting
policies of the Company. There were no significant changes in
the Company's commitments and contingencies as previously
described in the 1993 Annual Report to Shareholders and related
annual report to the Securities and Exchange Commission on Form
10-K.
2. In November 1993, the Accounting Standards Division of the
AICPA issued Statement of Position 93-6, "Employers' Accounting
for Employee Stock Ownership Plans" (SOP 93-6). This statement
changes the recognition of compensation for stock allocated to
employee accounts to satisfy plan benefits, settlement of plan
liabilities and changes the inclusion in earnings per share of
shares held in trust by ESOPs. As provided for under this
statement, the Company is not required to adopt this method of
accounting as its existing ESOP (TASP) was established before
December 31, 1992. Had this statement been adopted January 1,
1994, both the primary and fully diluted earnings per share for
the quarter and six months ended June 30, 1994 would have been
$.01 and $.29, respectively.
3. The Company and its subsidiaries are defendants in various
lawsuits incidental to their businesses. It is the opinion of
management that the ultimate outcome of these actions will not
have a material impact on the Company's financial position or
results of operations.
PAGE 8
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Total Company revenues for the second quarter increased 3.9%
to $1.1 billion while year-to-date revenues increased 7.4% to
$2.2 billion compared with the same periods a year ago. Revenue
declined at CF MotorFreight (CFMF), the Company's less-than-
truckload (LTL) carrier, due to a 24-day strike. However, this
decline was more than offset by continued growth at the Con-Ways
and Emery Worldwide.
Operating income for the second quarter declined 29% to
$18.0 million while year-to-date operating income increased 14.6%
to $53.5 million compared with the prior year. Both quarterly
and year-to-date results were adversely impacted by the strike-
related losses at CFMF. However, combined Con-Way and Emery
operating income of $60.1 million for the quarter and $91.7
million year-to-date exceeded operating losses at CFMF.
CF MOTORFREIGHT
CF MotorFreight (CFMF) second quarter and year-to-date
revenues declined 24.4% and 11.1%, respectively, compared with
corresponding periods in the prior year as a result of the 24-day
Teamster strike. Total tonnage declined 28.9% and 14.8% for the
quarter and six-months periods, respectively. CFMF was able to
regain most of the business lost during the strike; June tonnage
was down only 6% compared to the prior year.
Costs incurred during the strike, and subsequent start-up of
business activities following the strike, resulted in a second
quarter and year-to-date operating loss of $42.1 million and
$38.2 million, respectively. This compared to operating income
of $6.4 million and $16.5 million in the prior year second
quarter and first six months, respectively.
In May 1994, CFMF signed a new four-year contract with the
Teamsters that will allow more flexibility in the use of part-
timers and rail. As business levels increase, CFMF will benefit
from such operating flexibility. Additionally, in an effort to
re-invigorate the LTL carrier, a new management team was brought
in in July 1994. This new management team will focus on
continually improving service provided to customers, emphasizing
value-added service and continuing to reduce costs.
PAGE 9
CON-WAY TRANSPORTATION SERVICES
Con-Way Transportation Services (CTS) revenues for the
second quarter increased significantly to $273.9 million, or
37.7% over the same period last year, setting another revenue
record. Total tonnage increased 28.7% while the higher rated LTL
tonnage increased 38.1%. Year-to-date revenues increased 30.3%
over the prior year on a total tonnage increase of 26.6% with
higher rated LTL tonnage increasing 30.9% The Con-Ways have
benefited from consistent growth throughout 1994 and, during the
quarter, from the Teamsters strike of the unionized LTL carriers.
Operating income for the second quarter increased $18.3
million, or 99.0% over the same period last year, while year-to-
date operating income was up $23.3 million, or 67.8%, to $57.7
million. Operating margins continued to improve as CTS benefited
from the revenue growth.
The Con-Ways will continue to expand into new markets and
benefit from utilizing joint service agreements. The joint
service agreements augment business levels by allowing the
companies to provide additional service to customers in certain
markets. The expected growth should help offset planned hourly
wage increases and start-up costs associated with expansion into
new markets.
EMERY WORLDWIDE
Tonnage increased in the quarter from domestic and
international operations by 52% and 45%, respectively, resulting
in 31.1% growth in Emery's revenues over last year. Emery
continues to benefit from a successful marketing strategy and a
growing air freight market. Second quarter revenues also
benefited from the Teamster strike of the unionized LTL carriers.
These factors also contributed to a year-to-date increase in
revenues of 25.4% over the prior year.
The strong revenue growth coupled with managed cost
containment resulted in an increase of operating income for the
quarter to $23.4 million from $453,000 in the prior year.
Emery's second quarter operating income exceeded the 1993 full
year operating income by 40.8%. Operating income for the first-
half of 1994 of $34.0 million was a $38.2 million improvement
over the $4.2 million loss in the same period 1993.
Emery management will continue with the same programs that
have proven successful at increasing revenues and controlling
costs. To this end, Emery has put into service 6 of 9 DC-8 jet
freighters ordered earlier in the year with the remainder to be
put into service through the fourth quarter. Although these
additions replace existing short-term leased planes, they allow
Emery to more efficiently service existing business levels and
PAGE 10
the approaching peak seasonal shipping levels.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1994 the Company had $133.0 million in cash and
cash equivalents and $14.0 million in long term investments.
Cash flow from operations of $95.0 million was primarily the
result of income from operations and significant depreciation and
amortization. The Company was able to finance its capital
expenditures with cash flows from operations as capital
expenditures during the first six months of the year were $98.7
million. The Company's Board of Directors recently approved an
increase of approximately 45% in 1994 capital expenditures to
$260 million for revenue equipment, freight terminal facilities,
technology expansion and aircraft. The Company intends to
finance the remaining capital requirements for the year with cash
from operations supplemented by other contemplated external
financing arrangements.
In May 1994, the Company secured an additional $25 million
under the Emery receivables sale facility. This brings the total
availability under this facility for cash and non-transferable
promissory notes and related letters of credit to $100 million.
At June 30, 1994, $72 million of letters of credit were issued
and secured with Emery receivables.
The Company has a $250 million unsecured credit facility and
previously a related $110 million facility that provide for a
combined maximum of $250 million for letters of credit and
working capital needs. In May 1994, the $110 million agreement
was amended to $55 million and allows the Company, at its option,
to separate this agreement from the $250 million restriction.
Should the Company elect to separate the $55 million, the
interest rate charged on outstanding balances under this
agreement will increase by .375%. At June 30, 1994, $93.6
million of letters of credit were issued under these agreements.
Separately in May, the Company entered into a $50 million
unsecured revolving credit facility to provide for working
capital needs. Loans bear interest at Prime plus an amount
dependent on the Company's credit rating (.125% at June 30,
1994). As of June 30, 1994, no amounts were outstanding under
this agreement.
In addition, the Company negotiated several unsecured letter
of credit facilities with various banks that total $30 million.
At June 30, 1994, $22.2 million was outstanding under these
agreements. Subsequent to June 30, 1994, the Company added an
additional $15 million unsecured letter of credit facility.
PAGE 11
OTHER
The Company's operations necessitate the storage of fuel in
underground tanks as well as the disposal of substances regulated
by various federal and state laws. The Company adheres to a
stringent site-by-site tank testing and maintenance program
performed by a qualified independent party to protect the
environment and comply with regulations. Where the need for
clean-up is necessary, the Company takes appropriate action.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
As previously reported, the Company has been designated a
Potentially Responsible Party (PRP) by the EPA with respect to
the disposal of hazardous substances at various sites. The
Company expects its share of the total cleanup costs of all sites
to be immaterial. Certain legal matters are discussed in Note 3
in the Notes to Consolidated Financial Statements in Part I of
this form.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were presented at the Annual Shareholders Meeting held
April 25, 1994 the following proposals with respective voting
results:
For the purpose of electing certain members of the Board of
Directors, the votes representing shares of Common and Preferred
stock were cast with the following results:
Nominee For Withheld
Robert Alpert 29,913,644 1,032,555
Robert Jaunich II 29,985,225 960,974
Raymond F. O'Brien 29,954,617 991,582
Robert P. Wayman 29,971,620 974,579
The following directors did not stand for election and
continued in office as a director after the Annual Shareholders
Meeting: John C. Bolinger, Jr., Earl. F Cheit, G. Robert Evans,
Gerhard E. Liener, Richard B. Madden, Donald E. Moffitt, Ronald
E. Poelman, Robert D. Rodgers.
The appointment of Arthur Andersen & Co. as independent
public accountants for the year 1994 was approved by the
following vote: For 30,017,697; Against 277,388; Abstaining
150,380; Broker non-votes 1,048,124.
PAGE 12
The proposal to adopt the Consolidated Freightways, Inc.
Equity Incentive Plan for Non-Employee Directors was approved by
the following vote: For 27,290,068; Against 2,722,847; Abstaining
430,830; Broker non-votes 1,049,844.
The stockholder proposal to declassify the Board of
Directors for the purpose of Director elections was defeated by
the following vote: For 11,073,478; Against 15,541,934;
Abstaining 1,295,150; Broker non-votes 3,583,027.
The stockholder proposal to eliminate the 80% vote
requirement in the by-laws to change the structure of the Board
of Directors was defeated by the following vote: For 11,704,571;
Against 16,338,804; Abstaining 323,939; Broker non-votes
3,126,275. The proposal required the favorable vote of 80% of all
outstanding shares of stock entitled to vote. It received the
favorable vote of 28.4% of such voting shares.
The stockholder proposal to adopt a policy of confidential
voting was defeated by the following vote: For 3,576,779; Against
27,337,181; Abstaining 17,561; Broker non-votes 562,068.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
10.1 First Amendment to Letter of Credit
Facility Agreement dated as of May 26,
1994, between Consolidated Freightways,
Inc. and Bank of America National Trust
and Savings Association.
(11) Computation of Per Share Earnings
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 1994.
PAGE 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company (Registrant) has
duly caused this Form 10-Q Quarterly Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED FREIGHTWAYS, INC.
(Registrant)
August 11, 1994 /s/Gregory L. Quesnel
Gregory L. Quesnel
Executive Vice President -
Chief Financial Officer
August 11, 1994 /s/Robert E. Wrightson
Robert E. Wrightson
Vice President and Controller
First Amendment to
Letter of Credit Facility Agreement
THIS FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT
(the "Amendment"), dated as of May 26, 1994, is entered into by
and between CONSOLIDATED FREIGHTWAYS, INC. (the "Company") and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Bank").
RECITALS
A. The Company and the Bank are parties to a Letter of
Credit Facility Agreement dated as of July 30, 1993 (the "Credit
Agreement") pursuant to which the Bank has extended certain
letter of credit facilities to the Company.
B. The Company has requested that the Bank agree to certain
amendments of the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement
subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings, if any,
assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be amended as
follows:
(i) The definition of "Maximum Amount" is amended in its
entirety to provide:
"Maximum Amount" means Fifty Five Million
Dollars ($55,000,000).
(ii) The definition of "Termination Date" is amended in its
entirety to provide:
"Termination Date" means July 31, 1995.
(iii) A new definition "6.07 Notice" is inserted in its
proper alphabetical order, providing as follows:
"6.07 Notice" means a notice pursuant to
Section 6.07."
(b) Section 2.02(e) of the Credit Agreement shall be amended
as follows:
(i) in the first line thereof, "(f)" shall be
deleted and "(1)" shall be inserted in lieu thereof;
(ii) clauses (1), (2), (3) and (4) shall be
renumbered as (2), (3), (4) and (5) respectively;
(iii) as so renumbered, clause (2) shall be
amended in its entirety to provide:
"(2) The Company shall pay the Bank per annum
fees on the Standby Letters of Credit determined in
accordance with the following:
On any day the rating assigned to And the And the
the Company's senior unsecured long- 6.07 6.07
term debt is: Notice Notice
is not is in
in effect
effect
Below BBB- by Standard & Poor's
Corporation AND below Baa3 by
Moody's Investors Service, Inc. 0.9375% 1.3125%
BBB- or better by Standard & Poor's
Corporation OR Baa3 or better by
Moody's Investors Service, Inc. 0.7500% 1.1250%
BBB- or better by Standard & Poor's
Corporation AND Baa3 or better by
Moody's Investors Service, Inc. 0.6250% 1.0000%
"These fees shall be computed quarterly in arrears on the
average daily amount of the Outstanding Letters of Credit,
payable on the last day of each fiscal quarter of the
Company so long as there is an Outstanding Letter of Credit;
and if at any time there is no Outstanding Letter of Credit,
all such accrued and unpaid fees shall be due and payable
within 10 days of billing."
(c) Section 6.07 of the Credit Agreement is amended in its
entirety to provide:
"6.07 Availability Under the Morgan Agreement.
"(a) The Company shall maintain at all times,
undrawn and available credit to the Company under the Morgan
Agreement in an amount not less than the aggregate amount of
outstanding Letter of Credit Obligations and Outstanding
Letters of Credit. In computing the undrawn and available
credit to the Company under the Morgan Agreement, the
Company's reimbursement obligations with respect to letters
of credit issued and outstanding thereunder and drafts paid
but not yet reimbursed shall not be included in computing
the available amount of credit under the Morgan Agreement;
except that the Company may:
"(b) Once, during the term of this Agreement,
notify the Bank that the Company is not, or will not be,
complying with the provisions of subsection (a) of this
Section (the "6.07 Notice") and during such period, the
increased letter of credit per annum fees under Section
2.02(e)(2) shall be in effect.
"(c) After sending the Bank the 6.07 Notice,
thereafter notify the Bank that it will comply with the
provisions of subsection (a) of this Section and, upon
receipt of such subsequent notice the lower letter of credit
per annum fees under Section 2.02(e)(2) shall be in effect."
3. Representations and Warranties. The Company hereby
represents and warrants to the Bank as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the Company of
this Amendment have been duly authorized by all necessary
corporate and other action and do not and will not require any
registration with, consent or approval of, notice to or action
by, any Person (including any Governmental Authority) in order to
be effective and enforceable. The Credit Agreement as amended by
this Amendment constitutes the legal, valid and binding
obligations of the Company, enforceable against it in accordance
with its respective terms, without defense, counterclaim or
offset.
(c)
(c) All representations and warranties of the Company
contained in the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the basis
of its own investigation and for its own reasons, without
reliance upon the Bank or any other Person.
4. Effective Date. This Amendment will become effective as
of May 26, 1994 (the "Effective Date"), provided that each of the
following conditions precedent has been satisfied:
(a) The Bank has received from the Company a duly executed
original of this Amendment.
(b) The Bank has received from the Company a copy of a
resolution passed by the board of directors of such corporation,
certified by the Secretary or an Assistant Secretary of such
corporation as being in full force and effect on the date hereof,
authorizing the execution, delivery and performance of this
Amendment.
(c) The Bank has received from the Company the amount of
Twenty Thousand Dollars ($20,000), representing payment in full
of a non-refundable amendment fee, which amount the Company
hereby covenants to pay to the Bank on demand.
5. Reservation of Rights. The Company acknowledges and
agrees that the execution and delivery by the Bank of this
Amendment shall not be deemed to create a course of dealing or
otherwise obligate the Bank to forbear or execute similar
amendments under the same or similar circumstances in the future.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants
and provisions of the Credit Agreement are and shall remain in
full force and effect and all references therein to such Credit
Agreement shall henceforth refer to the Credit Agreement as
amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective
successors and assigns. No third party beneficiaries are
intended in connection with this Amendment.
(c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument.
(e) This Amendment supersedes all prior drafts and
communications with respect thereto. This Amendment may not be
amended except in accordance with the provisions of Section 8.01
of the Credit Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision
shall be invalidated without affecting the remaining provisions
of this Amendment or the Credit Agreement, respectively.
(g) Company covenants to pay to or reimburse the Bank, upon
demand, for all costs and expenses (including allocated costs of
in-house counsel) incurred in connection with the preparation,
negotiation, execution and delivery of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Amendment as of the date first above written.
Consolidated Freightways, Inc.
By: /s/David F. Morrison
Name: David F. Morrison
Title: Vice President - Treasurer
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/Michael J. Dasher
Name: Michael J. Dasher
Title: Vice President
<TABLE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
The following is the computation of fully-diluted earnings per share:
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
(Dollars in thousands except per share data)
<S> <C> <C> <C> <C>
Earnings:
Net income $ 5,207 $ 8,392 $ 20,463 $ 16,660
Preferred dividends 4,763 4,747 9,497 9,496
Net income applicable to common shareholders 444 3,645 10,966 7,164
Non-discretionary adjustments under
the if-converted method:
Addback: Series B, preferred dividends, net of
tax benefits 2,106 2,090 4,184 4,183
Less: Replacement of funding
adjustment, net of tax benefits (1) (2,106) (2,090) (4,184) (4,183)
Net income applicable to common
shareholders $ 444 $ 3,645 10,966 $ 7,164
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common shares 36,213,566 35,402,458 36,088,779 35,381,427
Equivalents - stock options 1,100,910 464,530 1,128,683 563,863
Preferred stock - if-converted method 4,228,495 4,551,249 4,228,495 4,551,249
41,542,971 40,418,237 41,445,957 40,496,539
FULLY-DILUTED EARNINGS PER SHARE
Net income applicable to common
shareholders $ 0.01 $ 0.09 0.26 $ 0.18
(1) Additional payment to the TASP to replace the funding lost under the if-converted method.
</TABLE>
